Globalisation and inflation: Insights from the ECB strategy review


Source: voxeu.org voxeu.org

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After being dormant for about two decades, inflation has started making headlines again. For example, the OECD forecasts US inflation to reach 3.6% in 2021, a remarkable rise from the 1.8% averaged over the last decade. Supply bottlenecks, the shortage of semiconductors, rising commodity prices, and adjustment in Covid-19 sensitive sectors are pushing consumer prices up. The debate on whether these are temporary factors, or whether they could lead to more entrenched price pressure, is intertwined with a longer-term discussion on the post-pandemic economic landscape and to the role that globalisation could have on price dynamics (e.g. Blanchard 2020). To...